IRI Partners Blog

At Insurance Resources International, LLC (IRI), we have worked with dozens of
companies, both P&C Insurers and the companies in the Eco-System that provide
key products and services vital to the Insurance Industry.

Our blog features our views and occasionally those of our strategic partners and
guest bloggers. We strive to blog on topics relevant in your world and core to
delivering best in class process, product and service.

We are firm believers that while Insurance is a huge business, it is a small
community.

In this post, we will highlight some of what we think are some of the enduring trendsin the auto claimsspace of the P&C market. These include:

Lower Frequency

Using new technology in old ways

Focus on LAE in a vacuum vs. lowest ultimate cost

Strategic partnerships

Insurance industry as a fast follower vs., innovator

Finding people via referrals & “networks”

Some of these enduring trends are exogenous to specific insurers and will take time to play out, but insurers unwilling to look at and plan for the long term, will simply fail faster, accelerating the inevitable (and much needed) consolidation already beginning to occur.

Every insurance company has oceans of data. Many are drowning in their own data. What they don't have much of is actionable information.

Every company has near term, descriptive data. This is point in time information that provides a metric for a variable at a fixed point in time – new claims, new applications, closed claims, endorsement error rate, etc. Most companies now have insightful data. This is data that provides data over time – new PIF per day over a rolling 12-month period, new claims/day over variable time periods. Trend over time is an important directional indicator.

What few companies have is predictive data. This is getting into the arena of actionable information – information that provides the decision maker (can be at any/many levels of the organization) data/information that allows them to make proactive decisions affecting the going forward business, not just data that they react to after the fact.

Progressive thinking organizations have an overt strategy for using all three kinds of data and leveraging both internal and external data and analytics to provide actionable predictive data that leads to competitive advantage.

I am a firm believer in the operational executive using a balanced scorecard approach to developing strategy and looking at the core performance of a company or operating division.

The key flaw in the execution of using a balanced scorecard as a strategic tool is in the approach to execution. While there are 4 core quadrants to measure and manage (financial, process, people and customer) using this approach, the common execution flaw is beginning with financial first and letting financial drive the other 3 areas. It seems like the natural place for an executive in a financial services firm to begin but results in looking at the enterprise through the wrong lens.

Yes, Insurance is at its foundation a financial enterprise. But, beginning with financial and letting it drive the other three core areas actually limits the financial benefits available to the organization.

If you start with a focus on process, then the focus is on existing steps, touches and cycle time. Looking at processes with an eye towards elimination of steps, touches, duplication and redundancy – all result in financial gain.

If you looked at customer, with an eye towards identification and delivery of customer specific solutions, being delivered in new and value add ways, resulting in financial gain.

If you understood process and customer, then looked at people, with an eye towards who, where, when, what type (part time, full time, contract, vendor partner), would result in a constantly evolving need, mix and cost - resulting in much lower financial cost.

Yes insurance is a financial business, but beginning and ending your review of the businesses results, from a purely financial perspective, drives the wrong conclusions, and poor overall execution of your strategy.